Q2 2012 www.businessmonitor.com VietNam pharmaceuticals & Healthcare Report INCLUDES BMI'S FORECASTS ISSN 1748-2305 Published by Business Monitor International Ltd. VIETNAM PHARMACEUTICALS & HEALTHCARE REPORT Q2 2012 INCLUDES 10-YEAR FORECASTS TO 2021 Part of BMI’s Industry Survey & Forecasts Series Published by: Business Monitor International Copy deadline: March 2012 Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 email: subs@businessmonitor.com web: http://www.businessmonitor.com © 2012 Business Monitor International. All rights reserved. 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All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. Vietnam Pharmaceuticals & Healthcare Report Q2 2012 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 CONTENTS Executive Summary . SWOT Analysis . Vietnam Pharmaceutical And Healthcare Industry SWOT Vietnam Political SWOT Vietnam Economic SWOT 10 Vietnam Business Environment SWOT . 11 Pharmaceutical Risk/Reward Ratings 12 Table: Asia Pacific Pharmaceutical Risk/Reward Ratings, Q212 12 Rewards . 13 Risks 13 Vietnam – Market Summary 15 Regulatory Regime . 17 Pharmaceutical Advertising . 18 Intellectual Property Environment . 19 IP Shortcomings . 19 Counterfeit Drugs 21 Pricing Regime 22 Price Spikes . 23 Reimbursement Regime 24 Pricing And Reimbursement Developments . 25 Industry Trends And Developments 27 Epidemiology . 27 Communicable Diseases 28 HIV/AIDS . 28 Non-Communicable Diseases 29 Healthcare Financing 30 Hospital Sector 31 Private Healthcare Sector 32 Healthcare Insurance 33 Healthcare And Pharmaceutical Reform . 35 Foreign Partnerships . 36 Research & Development 37 Biotechnology Sector . 37 Vaccines . 39 Clinical Trials 40 Medical Device Market 41 Industry Forecast Scenario . 43 Overall Market Forecast 43 Table: Pharmaceutical Sales, 2008-2016 44 Key Growth Factors – Industry 45 Table: Overall Healthcare Expenditure, 2008-2016 46 Table: Government Healthcare Expenditure, 2008-2016 47 Table: Private Healthcare Expenditure, 2008-2016 47 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Key Growth Factors – Macroeconomic . 48 Table: Vietnam Economic Activity, 2011-2016 50 Prescription Drug Market Forecast . 51 Table: Prescription Drug Sales, 2008-2016 53 Patented Drug Market Forecast 54 Table: Patented Drug Sales, 2008-2016 . 55 Generic Drug Market Forecast 56 Table: Generic Drug Sales, 2008-2016 . 57 OTC Medicine Market Forecast 58 Table: OTC Medicine Sales, 2008-2016 59 Medical Device Market Forecast . 60 Table: Medical Device Sales, 2008-2016 . 61 Pharmaceutical Trade Forecast 62 Table: Pharmaceutical Trade, 2008-2016 . 64 Other Healthcare Data Forecasts 65 Key Risks To BMI’s Forecast Scenario 66 Competitive Landscape . 67 Pharmaceutical Industry 67 Domestic Pharmaceutical Sector . 68 Foreign Pharmaceutical Sector . 70 Recent Pharmaceutical Industry News . 71 Traditional Medicines 73 Pharmaceutical Distribution 75 Pharmaceutical Retail Sector 75 Table: Key Aspects Of Good Pharmacy Practice In Developing Countries . 77 Company Profiles . 78 Local Companies 78 Vietnam Pharmaceutical Corporation (Vinapharm) 78 Vietnam OPV Pharmaceutical Co . 80 Vietnam Pharmaceutical Joint Stock Company (Ampharco) . 82 Vidipha Central Pharmaceutical Joint Stock Company . 84 Multinational Companies 85 Pfizer . 85 Sanofi . 86 Novartis . 88 Merck & Co . 89 GlaxoSmithKline 91 Country Snapshot: Vietnam Demographic Data . 92 Section 1: Population . 92 Table: Demographic Indicators, 2005-2030 92 Table: Rural/Urban Breakdown, 2005-2030 . 93 Section 2: Education And Healthcare 93 Table: Education, 2002-2005 93 Table: Vital Statistics, 2005-2030 93 Section 3: Labour Market And Spending Power 94 Table: Employment Indicators, 1999-2004 94 Table: Consumer Expenditure, 2000-2012 (US$) 94 Glossary 95 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 BMI Methodology . 97 How We Generate Our Pharmaceutical Industry Forecasts 97 Pharmaceuticals Risk/Reward Ratings Methodology . 98 Ratings Overview . 98 Table: Pharmaceutical Business Environment Indicators . 99 Weighting 100 Table: Weighting Of Components .100 Sources .100 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Executive Summary BMI View: The attractiveness of the Vietnamese pharmaceutical market to foreign investors will continue to be hampered by the country’s poor enforcement of intellectual property (IP) and the authorities limiting market access through distribution restrictions and mandatory domestic clinical trials. However, over the long term we expect more private healthcare involvement in the country, which will bring opportunities for pharmaceutical companies and medical devices suppliers. Headline Expenditure Projections ƒ Pharmaceuticals: VND39,003bn (US$1.89bn) in 2011 to VND45,284bn (US$2.15bn) in 2012; +16.1% in local currency terms and +14.0% in US dollar terms. ƒ Healthcare: VND178, 462bn (US$8.64bn) in 2011 to VND205,885bn (US$9.79bn) in 2012; +15.4% in local currency terms and +13.3% in US dollar terms. ƒ Medical devices: VND15,006bn (US$727mn) in 2011 to VND17,016bn (US$809mn) in 2012; +13.4% in local currency terms and +11.3% in US dollar terms. Risk/Reward Rating: The country’s score is unchanged at 44.7 in Q112, maintaining its rank of 14th out of the 18 key markets surveyed. Its risks and rewards profiles are relatively evenly balanced. Key Trends And Developments ƒ In January 2012, Nipro Pharma Corporation from Japan announced plans to establish a plant in Vietnam. The company will invest JPY6bn (US$78.1nm) initially and offer contract manufacturing of new drugs and generic products, focusing on injectables. The company will distribute the products manufactured at the new plant to developed markets including Japan, European countries and the US. The plant is likely to begin operations in April 2015. ƒ In the same month, US-based Watson Pharmaceuticals acquired Ascent Pharmahealth, the Australia and South East Asia generic pharmaceutical business of Strides Arcolab, for AUD375mn (US$399mn). As a result, Watson is the fifth-largest generic pharmaceuticals company in Australia and the largest generic drugs company in Singapore (Ascent Pharmahealth’s Asian headquarters). It also gained sale offices in Malaysia, Hong Kong, Thailand and Vietnam. BMI Economic View: The surge in crude oil prices has presented significant upside risks to cost-push inflationary pressure in Vietnam. However, we believe this is not enough to reverse the downtrend in headline consumer price inflation (CPI) given that credit conditions remain tight. We expect demand for credit to continue to cool in H112 as foreign direct investment (FDI) eases on the back of a bleak outlook © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 for exports. Accordingly, we continue to see 400 basis points (bps) worth of rate cuts by the State Bank of Vietnam (SBV), bringing the policy rate from 15.00% to 11.00% by the end of 2012. BMI Political View: Vietnam’s biggest political question over the coming decade is whether one-party rule under the Communist Party of Vietnam (CPV) will face growing pressure for democratisation, as has been the case in other major South East Asian countries. While our core scenario envisages the CPV transforming itself into a technocratic administration, it faces major economic challenges that could lead to widespread unrest if they are mismanaged. On the foreign policy front, we expect an increasingly powerful China to drive Vietnam further into the camp of Asian nations with close relations with the US. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 SWOT Analysis Vietnam Pharmaceutical And Healthcare Industry SWOT Strengths Weaknesses Opportunities Threats ƒ Significant growth potential, given a large and growing population. ƒ The government’s commitment to developing the health sector. ƒ Sizeable local generic drugs sector, which is being encouraged by the government. ƒ Strong traditional medicines segment with potential to improve the non-prescription drugs market in the longer term, as long as sufficient investment in extraction technologies can be found. ƒ One of the least developed pharmaceutical markets in Asia with low per capita spending on drugs. ƒ Counterfeit drugs account for a significant amount of market consumption. ƒ Little distinction made between prescription and over-the-counter drugs, with most medicines available without a prescription. ƒ Complex drug pricing policy biased towards local drug producers. ƒ Import-reliant market, especially in terms of high-tech products and active pharmaceutical ingredients, which makes it vulnerable to international currency movements. ƒ Underdeveloped primary care services and a shortage of trained pharmacists is continuing to hamper access to medicines and product market penetration. ƒ Population concentrated in rural, rather than urban areas, preventing access to modern drugs and encouraging dependence upon traditional medicines. ƒ The Association of South East Asian Nations (ASEAN) harmonisation initiative, including the adoption of Western regulatory standards such as International Conference on Harmonisation and World Health Organization guidelines. ƒ Introduction of five-year exclusivity for clinical dossier data encouraging researchbased multinationals. ƒ If investment can be found for technological improvements, then there is great potential in the traditional Chinese medicine market, in addition to fledging biotechnology. ƒ Full WTO membership improving the trading climate and potentially, in the longer term, redressing pharmaceutical trade issues. ƒ Requirement for domestic companies to comply with international good manufacturing practices should boost exports. ƒ Government resistance to aligning patent law fully with international standards deterring multinational sector expansion. ƒ Need to resolve infrastructural and power supply issues, as well as higher education provision, before higher levels of foreign direct investment can be expected. ƒ The government is increasingly interfering in the industry, protecting indigenous firms through the use of legal trade barriers, which will affect competitiveness. ƒ Pharmaceutical price inflation threatens to put medicines out of reach of poor and therefore limit market volume growth. ƒ Legalisation of parallel imports negatively impacting performance of patented drugs. ƒ New health insurance legislation decreasing patients’ access to medicines. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Vietnam Political SWOT Strengths Weaknesses Opportunities Threats ƒ The CPV remains committed to market-oriented reforms and we not expect major shifts in policy direction over the next five years. The one-party system is generally conducive to short-term political stability. ƒ Relations with the US have witnessed a marked improvement, and Washington sees Hanoi as a potential geopolitical ally in South East Asia. ƒ Corruption among government officials poses a threat to the legitimacy of the CPV. ƒ There is increasing (albeit still limited) public dissatisfaction with the leadership’s tight control over political dissent. ƒ The government recognises the threat corruption poses to its legitimacy, and has acted to clamp down on graft among party officials. ƒ Vietnam has allowed legislators to become more vocal in criticising government policies. This is opening up opportunities for more checks and balances within the oneparty system. ƒ Macroeconomic instability in 2012 is likely to weigh on public acceptance of the oneparty system, and street demonstrations to protest economic conditions could develop into a full-on challenge of undemocratic rule. ƒ Although strong domestic control will ensure little change to Vietnam’s political scene in the next few years, over the longer term, the one-party state will probably be unsustainable. ƒ Relations with China have deteriorated over recent years due to Beijing’s more assertive stance over disputed islands in the South China Sea and domestic criticism of a large Chinese investment into a bauxite mining project in the central highlands, which could potentially cause wide-scale environmental damage. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Sanofi Strengths Weaknesses Opportunities Threats Company Overview ƒ Direct manufacturing presence in the country, benefiting from the advantages given to locally produced drugs. ƒ Among the top three pharmaceutical companies in Vietnam. ƒ Strong product portfolio covering a wide range of therapeutic areas. ƒ Involvement in the vaccines sector. ƒ Long tradition of partnerships with local players. ƒ Substandard IP regime in the country. ƒ Sizeable parallel imports and counterfeit industries. ƒ Need for local vaccine trials before gaining product approval. ƒ Sector modernisation to increase the demand for branded products. ƒ In a strong position to increase its market penetration as the sector continues to open. ƒ Plans for a major overhaul of the regulatory environment, aiming to boost foreign investment. ƒ Relaxation of price freeze to improve product revenues. ƒ WTO membership to improve operating conditions for foreign players in the country. ƒ Government resistance to aligning domestic patent law fully with international standards. ƒ Lack of progress in terms of significantly reducing the role of counterfeit drug industry. ƒ The government aiming to protect local drug companies through the use of legal trade barriers, potentially adversely affecting the company’s market presence. ƒ Vietnam becoming increasingly susceptible to economic fluctuations, which would jeopardise local investment. ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. Sanofi enjoys a strong position in the Vietnamese pharmaceutical market. Sanofi-Aventis Vietnam was established in 1989 and has more than 600 employees. In May 2011, Sanofi-Aventis’s shareholders approved a proposal submitted by the board to shorten the company’s name to Sanofi and use it with immediate effect. A new logo has also been created. The first pharmaceutical JV in the country, Sanofi-Aventis Vietnam, was set up by local company Central Pharmaceutical Manufacturing Enterprise and Sanofi-Synthélabo. Medical Export-Import Company (Vietnam) and Rhone-Poulenc (now part of Sanofi) followed with Vinaspecia. The firm’s production facilities are GMP and ISO 9002 certified. Main export destinations include other Asian countries and the former USSR. Vietnam is also the site of several clinical trials of pipeline products. Strategy Sanofi-Aventis Vietnam is likely to be negatively affected by government plans to control drug prices in the country. The company is also affected by the high import tariff rate, although WTO membership is responsible for phasing out of such tariffs. The company manufactures products and acts as a distributor for imported medicines, with the product portfolio numbering around 150 items. Its main products include Plavix (clopidogrel), Aprovel (irbesartan), Lovenox (enoxaparin), Tritace (ramipril), Taxotere (docetaxel), Eloxatin (oxaliplatin), Amaryl (glimepiride), Lantus (insulin), Stilnox (zolpidem), and Actonel (risedronate). Sanofi is also affected by regulations in the country that require foreign manufacturers to conduct © Business Monitor International Ltd Page 86 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 clinical trials in Vietnam before being able to release their vaccines. In Q409, the Ho Chi Minh City-based Pasteur Institute announced it had produced its first batch of domestically produced swine flu vaccines. The vaccine is soon to be tested in preclinical trials. Developments In December 2011, the company signed an agreement with DKSH Laos to exclusively distribute six Vietnam-made pharmaceutical products to Laos. Sanofi will introduce another 50 products in the next few years. The firm has two plants in Ho Chi Minh City and approximately 30% of its medicine manufactured in Vietnam is exported to Asian countries. In August 2011, Thomas Kelly, Sanofi Asia Senior Vice President stated that the firm was interested in investing in a highly technological pharmaceutical plant in Ho Chi Minh and proposed that the city’s government facilitate the project. The idea stemmed from the fact that both Sanofi plants in the city are located in the urban areas. A rabies vaccine made by Vaccine and Biomedical Product Company No. was removed from the market in September 2007 due to safety fears. The withdrawal was not wholly unexpected as adverse events related to the product have been known about for over a decade and Vietnam was one of only three countries that still used the Fuenzalida-Palacios vaccine. To fill the market void, the health ministry allowed Sanofi-Aventis’s semi-finished rabies vaccine, Verorab, to be imported. Contact Details ƒ Address: Sanofi-Aventis Vietnam, 10 Ham Hghi, District 1, Ho Chi Minh City, Vietnam ƒ Tel: +84 82 98 526 ƒ Website: www.sanofi-aventis.com.vn © Business Monitor International Ltd Page 87 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Novartis Strengths Weaknesses Opportunities Threats Company Overview ƒ Well-established presence through its subsidiary Novartis Vietnam, which directly manufactures in the country. ƒ Benefits from the advantages given to locally produced drugs. ƒ Diverse manufacturing presence, including antibiotics, vitamins and OTC pharmaceuticals, consumer, generic and healthcare products, as well as vaccines. ƒ Government drug-pricing policy is biased towards local products, which disadvantages Novartis’ patented drugs offering. ƒ Low purchasing power of the majority of the population. ƒ Widespread counterfeiting. ƒ Underdeveloped healthcare infrastructure. ƒ Demand for branded products to rise with sector modernisation and regional harmonisation. ƒ Positive economic performance – with an increase in spending power – to underpin the development of pharmaceutical demand. ƒ Developing the potential of the generic sector to open up commercial opportunities for Novartis. ƒ Plans for a major overhaul of the domestic pharmaceutical regulatory environment, with a focus on increasing the level of foreign investment. ƒ Country remains heavily reliant on imported drugs. ƒ Government resistance to aligning patent law fully with international standards. ƒ As a part of its plan to overhaul the pharmaceutical sector, the government is planning to increase intervention and protect local companies through legal trade barriers, potentially affecting margins. ƒ Vietnam’s susceptibility to economic fluctuations, with currency depreciation recently forcing price rises. ƒ Legalisation of parallel imports negatively affecting performance of patented drugs. Novartis Vietnam was established following the merger of Sandoz and Ciba-Geigy in 1997. The company is active in the manufacture and distribution of speciality pharmaceuticals, consumer healthcare and generic medicines. Strategy Novartis’ portfolio includes medicines in transplantation and immunology, cardiovascular diseases, diseases of the central nervous system, Parkinson’s disease, skin allergies, OTC and ophthalmic medications. The following Novartis products maintain a leadership position in their respective segments: Lamisil (terbinafine), Clozaril (clozapine), Diovan (valsartan), Lescol (fluvastatin), Aredia (pamidronate), Navoban (tropisetron), Sandostatin (octreotide), Neoral (cyclosporine), Simulect (basiliximab), Femara (letrozole), Sandoglobulin (immune globulin), Miacalcic (calcitonin) and Lentaron (formestane). The company will strive to continue their promotion to private sector in particular, which will be encouraged by economic development. Contact Details rd ƒ Address: Novartis Pharma, Floor E-Town 2, 364 Cong Hoa St, Ward 13, Tan Binh District, Ho Chi Minh City, Vietnam ƒ Tel: +84 3810 1111 ƒ Website: www.novartis.com © Business Monitor International Ltd Page 88 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Merck & Co Strengths Weaknesses Opportunities Threats Company Overview ƒ One of the leading global producers of medicines. ƒ Considerable product portfolio, including consumer medicines. ƒ Merger with Schering-Plough further strengthening MSD’s presence in Vietnam. ƒ Difficult IP environment, including counterfeit drug trade and lax patent protection. ƒ No direct manufacturing or R&D presence in the country. ƒ Underdeveloped healthcare infrastructure. ƒ Rising demand for branded products following healthcare sector modernisation. ƒ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ƒ Pending creation of a local affiliate. ƒ Legal trade barriers protecting local players and disadvantaging multinationals. ƒ Currency depreciation forcing price adjustments. ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. The US drug major Merck & Co operates in Vietnam through its regional division, Merck, Sharp & Dohme (MSD) Asia Pacific, which was established in Vietnam in 1994. The company employs around 100 staff, who are mostly engaged in sales and marketing activities. Merck does not operate any manufacturing or R&D activities in Vietnam. Strategy The company is affected by regulations in Vietnam that require all state companies wishing to import foreign pharmaceutical products to apply for annual quotas. These activities are set to be phased out under the US-Vietnam Bilateral Trade Agreement. In Vietnam, MSD is mostly involved in supplying prescription products for a number of conditions. These include cardiovascular diseases, osteoporosis, asthma, osteoporosis and severe infections as well as range of other conditions such as hepatitis B. In January 2011, MSD announced that it will establish a 100% foreign-owned company in Vietnam. Headquartered in the capital Ho Chi Minh City, the operation will sell high-margin patented drugs, such as the cervical cancer vaccine Gardasil. Developments In November 2011, MSD established the Vietnam Society for Reproductive Medicine with Vietnam Gynaecology and Obstetrics Association. In February 2011, MSD, along with the Programme for Appropriate Technology in Health (PATH) and the National Institute of Hygiene and Epidemiology (NIHE), emerged to provide corporate social responsibility (CSR) activities, giving part of their profits to the development of community. At the end of May 2009, distributor Diethelm Vietnam Corp increased the prices of 14 speciality drugs – manufactured Merck – by 7.3-10%. The prices of imported drugs had been increasing as a result of currency depreciation and the growing price of raw materials. In March 2009, MSD said it regretted a labelling mistake on its measles, mumps and rubella vaccine. MMRII was labelled with instructions saying ‘for intramuscular injection’ rather than ‘for subcutaneous injections’. No adverse reaction was reported. © Business Monitor International Ltd Page 89 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 MSD’s cervical cancer vaccine Gardasil has been approved in Vietnam, as has its competitor, GSK’s Cervarix. GSK has reduced the price of its products, increasing competitive pressure. Contact Details th ƒ Address: Merck, Sharp & Dohme Asia Vietnam Branch, Floor, R.810 Sun Wah Tower, 115 Nguyen Hue Boulevard, District 1, Ho Chi Minh City, Vietnam ƒ Tel: +84 382 78100 ƒ Website: www.msd-vietnam.com © Business Monitor International Ltd Page 90 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 GlaxoSmithKline Strengths Weaknesses Opportunities Threats Company Overview ƒ One of the leading global producers of medicines. ƒ Some of its products are covered by the public insurance scheme. ƒ Considerable product portfolio, including consumer medicines and vaccines. ƒ Difficult IP environment. ƒ No direct manufacturing or R&D presence in the country. ƒ Counterfeiting remains a problem. ƒ Rising demand for branded products following healthcare sector modernisation. ƒ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ƒ Strong regional experience and connections. ƒ Legal trade barriers protecting local players and disadvantaging multinationals. ƒ Country susceptible to economic and currency fluctuations. ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. GSK began operating in Vietnam in 1994, with a staff of only seven. In the following years, GSK merged with Wellcome, and became GSK Vietnam. The company offers a range of prescription medicines, although not all of its products are covered by public insurance, as is the case with Advair/Seretide (fluticasone + salmeterol). Developments In July 2011, after the recall of Augmentin (amoxicillin clavulanate) in Hong Kong, DAV requested the firm send samples of the drug to be tested for plasticisers. This was after the Taiwan di(2ethylhexyl)phthalate (DEHP) scandal where the Taiwanese government detected DEHP, a plasticiser, in various food and health products in May 2011. DEHP is known to disrupt hormonal actions, reducing testosterone levels in boys and causing early sexual development in girls. In March 2010, the US FDA voiced concerns over GSK’s Rotarix vaccine. It was thought that the live oral preventative had been contaminated with a benign pig virus, known as porcine circovirus type (PCV-1). The US FDA recommended that any use of the vaccine be temporarily suspended. The DVA has also requested documents from GSK verifying the safety of the vaccine. GSK’s cervical cancer vaccine Cervarix has been approved in Vietnam. Its competitor, MSD’s Gardasil, also received approval in 2009. GSK reduced the price of its vaccine in mid-2010, in line with its ‘differential pricing’ strategy for certain products in select global markets. The government agency has also ordered 10,000 packets of GSK’s Relenza (zanamivir) for Tamiflu-resistant patients. In late 2009, GSK’s Augmentin’s retail price rose from VND14,000 to VND15,000 per pack. Contact Details ƒ Address: GlaxoSmithKline Vietnam, The Metropolitan, Unit 701, 235 Dong Khoi St, District 1, Ho Chi Minh City, Vietnam ƒ Tel: +84 3824 8744 ƒ Website: www.gsk.com/worldwide/vn.htm © Business Monitor International Ltd Page 91 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Country Snapshot: Vietnam Demographic Data Section 1: Population Population By Age, 2005 (mn) Population By Age, 2005 and 2030 (m n, total) 70-74 70-74 0-64 60-64 50-54 50-54 0-44 40-44 0-34 30-34 0-24 20-24 10-14 10-14 0-4 0-4 -6.0 -4.0 -2.0 0.0 Male 2.0 4.0 6.0 -10.0 -5.0 Female 0.0 2030 5.0 10.0 2005 Source: UN Population Division Table: Demographic Indicators, 2005-2030 2005 2010 2020f 2030f Dependent population, % of total 34.1 29.9 30.4 31.2 Dependent population, total, ‘000 28,318 26,225 30,950 34,499 Active population, % of total 65.8 70.0 69.5 68.7 Active population, total, ‘000 54,650 61,263 70,706 75,927 Youth population*, % of total 28.8 25.0 23.4 20.3 Youth population*, total, ‘000 23,972 21,887 23,807 22,508 Pensionable population, % of total 5.2 4.9 7.0 10.8 Pensionable population, total, ‘000 4,346 4,338 7,143 11,991 f = forecast, * youth = under 15. Source: UN Population Division © Business Monitor International Ltd Page 92 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Table: Rural/Urban Breakdown, 2005-2030 2005 2010 2020f 2030f Urban population, % of total 26.7 29.4 34.7 41.8 Rural population, % of total 73.3 70.6 65.3 58.2 Urban population, total, ‘000 22,509 26,395 35230 46,123 Rural population, total, ‘000 61,729 63,323 66426 64,306 Total population, ‘000 84,238 89,718 101,656 110,429 f = forecast. Source: UN Population Division Section 2: Education And Healthcare Table: Education, 2002-2005 2002/2003 2004/2005 Gross enrolment, primary 98 93 Gross enrolment, secondary 73 75 Gross enrolment, tertiary 10 16 Adult literacy, male, % na 93.9 Adult literacy, female, % na 86.9 na = not available. Gross enrolment is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education. Source: UNESCO Table: Vital Statistics, 2005-2030 2005 2010 2020f 2030f Life expectancy at birth, males (years) 68.4 69.9 74.2 75.8 Life expectancy at birth, females (years) 72.4 73.9 78.4 80.0 f = forecast. Life expectancy estimated at 2005. Source: UNESCO © Business Monitor International Ltd Page 93 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Section 3: Labour Market And Spending Power Table: Employment Indicators, 1999-2004 1999 2000 2001 2002 2003 2004 Employment, ‘000 38,120 38,368 39,000 40,162 41,176 42,316 – % change y-o-y 3.1 0.6 1.6 2.9 2.5 2.7 – male 19,029 19,292 19,744 20,356 20,959 21,649 – female 19,091 19,076 19,257 19,807 20,217 20,666 — female, % of total 50.0 49.7 49.3 49.3 49.1 48.8 Unemployment, ‘000 909 886 1,107 871 949 926 – male 439 468 458 398 402 410 – female 470 418 650 473 547 517 – unemployment rate, % 2.3 2.2 2.7 2.1 2.2 2.1 Source: ILO Table: Consumer Expenditure, 2000-2012 (US$) 2000 2007 2008 2009 2010 2012f 110 265 301 368 386 427 Poorest 20%, expenditure per capita 49 119 136 166 174 192 Richest 20%, expenditure per capita 243 587 668 815 855 946 Richest 10%, expenditure per capita 316 763 868 1,060 1,112 1,230 Middle 60%, expenditure per capita 85 206 235 286 301 332 Consumer expenditure per capita 556 1,196 1,297 na na na Poorest 20%, expenditure per capita 250 538 583 na na na Richest 20%, expenditure per capita 1,231 2,649 2,872 na na na Richest 10%, expenditure per capita 1,600 3,444 3,734 na na na 433 931 1,009 na na na Consumer expenditure per capita Purchasing power parity Middle 60%, expenditure per capita f = BMI forecast, na = not available. Source: World Bank, BMI © Business Monitor International Ltd Page 94 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Glossary ƒ Pharmaceuticals, medicines, drugs: synonym terms used interchangeably. ƒ Pharmaceutical market/sales: the sum of revenues generated by generic, patented, and over-thecounter (OTC) drugs through hospitals, retail pharmacies and other channels. Unless otherwise stated, market value is reported at final consumer price including mark-ups, taxes, etc. ƒ Prescription drugs: patented and generic drugs regulated by legislation that requires a physician’s prescription before they can be sold to a patient. ƒ Patented drug: an innovative medicine granted intellectual property protection by the patent and trademark office. The patent may encompass a wide range of claims – such as active ingredient, formulation, mode of action, etc. – giving the patent holder the sole right to sell the drug while the patent is in effect. ƒ Generic drug: a bioequivalent medicine that contains the same active ingredient as an originator drug. The originator drug is an innovative medicine that no longer has intellectual property protection due to patent expiry. ƒ OTC drug: a medicine that does not require a prescription to be sold to patients. Also known as nonprescription medicines. ƒ Counterfeit drugs: unregistered and illegal medicines which have not been subject to regulatory assessments to ensure quality, safety, efficacy and manufacturing standards. ƒ Similares: non-bioequivalent alternatives to either an originator patented drug or a generic drug. While similares and the originator/generic drug have a common indication, similares not always contain the same active ingredient as an originator and invariably have a different pharmacokinetic and pharmacodynamic profile. Prevalent in select South American countries, similares are legal. BMI does not include their sales in total pharmaceutical market values. ƒ Health expenditure: the sum of the funds mobilised by government and private systems for the operation of a healthcare system, according to the WHO. It includes the purchase of healthcare services and goods by public entities such as ministries and social security institutions; or by private entities such as non-profit institutions, commercial insurances and households acting as complementary funders to the previously cited institutions or unilaterally disbursing health commodities. The revenue base of these entities varies by country and comprises multiple sources. The inclusion of this in BMI © Business Monitor International Ltd Page 95 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 forecasts necessitates taking into account the essential attributes of country-specific health accounting such as comprehensiveness, consistency, standardisation and timeliness. ƒ Government health expenditure: the sum of outlays for health maintenance, restoration or enhancement paid by government entities such as a Ministry of Health, other ministries, parastatal organisations and social security agencies, including transfer payments to households to offset medical care costs and extra-budgetary funds to finance healthcare provision. ƒ Private health expenditure: the sum of outlays for health by private entities such as commercial or mutual health insurance, households, non-profit institutions serving households, resident corporations and quasi-corporations not controlled by governments – according to the WHO. ƒ Medical devices: products used for diagnosis or therapy in patients. Whereas pharmaceuticals achieve their principal action by pharmacological, metabolic or immunological means, medical devices act by physical or mechanical means. Medical devices include a wide range of products, including syringes, thermometers, blood-sugar tests, prosthetic limbs, ultrasound scans and X-ray machines, among others. ƒ Burden of Disease Database (BoDD): BMI’s disease database incorporates WHO, World Bank, IMF and BMI’s own data to create a proprietary dataset. BoDD data are quantified as the sum of disabilityadjusted life years (DALYs) lost to a disease in a particular country. ƒ Disability-Adjusted Life Years: the sum of the years of life lost (YLL) due to premature mortality in a population and the years lost due to disability (YLD) for incident cases of the health condition. The DALY is a health gap measure that extends the concept of potential years of life lost due to premature death (PYLL) to include equivalent years of ‘healthy’ life lost in states of less than full health (broadly termed ‘disability’). One DALY represents the loss of one year of equivalent full health. © Business Monitor International Ltd Page 96 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 BMI Methodology How We Generate Our Pharmaceutical Industry Forecasts Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMI’s Drug Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market. The following elements are fed into the model: ƒ BMI’s historic pharmaceutical market data, which has been collected from a range of sources including: – regulatory agencies; – pharmaceutical trade associations; – company press releases and annual reports; – subscription information providers; – local news sources; – information from market research firms that is in the public domain. ƒ Data that has been validated by BMI’s pharmaceutical and healthcare analysts using a composite approach, which scores data sources by reliability in order to ensure accuracy and consistency of historic data. ƒ Five key macroeconomic and demographic variables, which have been demonstrated, through regression analysis, to have the greatest influence on the pharmaceutical market. These have been forecast by BMI’s Country Risk analysts using an in-house econometric model. ƒ The burden of disease in a country. This is forecast in DALYs using BMI’s BoDD, which is based on the WO’s burden of disease projections and incorporates World Bank and IMF data. ƒ Subjective input and validation by BMI’s pharmaceutical and healthcare analysts to take into account key events that have affected the pharmaceutical market in the recent past or that are expected to have an impact on the country’s pharmaceutical market over the next five years. These may include policy/reimbursement decisions, new product launches or increased competition from generic drugs. © Business Monitor International Ltd Page 97 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Pharmaceuticals Risk/Reward Ratings Methodology BMI’s approach in assessing the risk/reward balance for Pharmaceutical & Healthcare Industry investors globally is fourfold. First, we identify factors (in terms of current industry/country trends and forecast industry/country growth) representing opportunities to would-be investors. Second, we identify country and industry-specific traits which pose or could pose operational risks to would-be investors. Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to avoid subjectivity. Finally, we use BMI’s proprietary Country Risk Ratings (CRR), ensuring that only the aspects most relevant to the Pharmaceutical & Healthcare Industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities and risks for companies across the globe. Ratings Overview Ratings System Conceptually, the ratings system divides into two distinct areas: Rewards: Evaluation of the sector’s size and growth potential in each state, as well as broader industry/state characteristics that may inhibit its development. Risks: Evaluation of industry-specific dangers and those emanating from a state’s political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Indicators The following indicators have been used. Overall, the ratings use three subjectively measured indicators and 41 separate indicators/datasets. © Business Monitor International Ltd Page 98 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Table: Pharmaceutical Business Environment Indicators Indicator Rationale Rewards Industry Rewards Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than smaller ones Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than low value ones Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period Country Rewards Urban-rural split Urbanisation is used as a proxy for development of medical facilities. Predominantly rural states score lower Pensionable population, % of total Proportion of the population over 65. States with ageing populations tend to have higher per capita expenditure Population growth, 2003-2016 Fast-growing states suggest better long-term trend growth for all industries Overall score for Country Structure is also affected by the coverage of the power transmission network across the state Risks Industry Risks Intellectual property (IP) laws Markets with fair and enforced IP regulations score higher than those with endemic counterfeiting Policy/reimbursements Markets with full and equitable access to modern medicines score higher than those with minimal state support Approvals process High scores awarded to markets with a swift appraisal system. Those that are weighted in favour of local industry or are corrupt score lower Country Risks Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues such as reliance on single sectors for exports/growth, and past economic volatility Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of government policy Bureaucracy Rating from CRR denotes ease of conducting business in the state Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security of investment can be a key risk in some emerging markets Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies’ ability to compete Source: BMI © Business Monitor International Ltd Page 99 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Weighting Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently, the following weight has been adopted. Table: Weighting Of Components Component Weighting Rewards 60% – Industry Rewards – 75% – Country Rewards – 25% Risks 40% – Industry Risks – 60% – Country Risks – 40% Source: BMI Sources Sources used include national industry associations, government ministries, global health organisations, officially released pharmaceutical company results and international and national news agencies. © Business Monitor International Ltd Page 100 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [...]... Ltd Page 15 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 with US and Chinese firms in recent years At the start of 2005, there were more than 10,000 kinds of medicines registered for sale in Vietnam and about 60% were produced locally © Business Monitor International Ltd Page 16 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Regulatory Regime The main regulatory authority in Vietnam is the.. .Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Vietnam Economic SWOT Strengths Vietnam has been one of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.1% annually between 2000 and 2011 The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 9.5% in 2010 Weaknesses Vietnam still... as biologics, cannot be manufactured in Vietnam, so some © Business Monitor International Ltd Page 25 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 spending on imports is necessary This problem is developing rapidly, with spending on medicines for Vietnamese health insurance holders increasing by 43.8% in 2009 compared with the previous year More recent reports from local press show that the issue... nations are looking to the committed actions of the Vietnamese government for inspiration According to the UNICEF, foreign experts work with the © Business Monitor International Ltd Page 27 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Vietnamese Ministry of Health to train local people to administer immunisations These indigenous ‘onthe-ground’ healthcare workers also spend a lot of time educating... is under-diagnosed and an increasing burden in Vietnam Research conducted by the Vietnam Allergy, Asthma and Clinical Immunity Association found that 4.7% of the Vietnamese population has asthma, with air pollution being one of the key causes The average annual © Business Monitor International Ltd Page 29 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 management cost per patient was US$301, which... does not block the grant of a compulsory licence on the basis of non-use or inadequate use © Business Monitor International Ltd Page 19 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Key concerns described by PhRMA in 2012 included: IP protection and enforcement: Vietnam s Data Protection Circular is not clear on whether the fiveyear term of regulatory data protection applies in cases that involve... overall score for risks Vietnam s score of 42 is among the lowest in the region, indicating substantial risks facing multinationals operating and wishing to operate in the country The regional average has improved slightly 57 in Q112 © Business Monitor International Ltd Page 13 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Industry Risks One of the most obvious drawbacks of the Vietnamese pharmaceutical... a large-scale political uprising could occur in the short-to-medium term © Business Monitor International Ltd Page 14 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Vietnam – Market Summary In common with many of its regional Pharmaceutical Market By Subsector neighbours, the Vietnamese 2011 (US$mn) pharmaceutical market is underdeveloped and suffers from poor regulatory and intellectual property... 50 40 46 42 46.9 13 Vietnam 47 47 47 40 44 42 44.7 14 Bangladesh 43 43 43 40 36 38 41.3 15 Pakistan 40 47 42 33 40 36 39.5 16 Sri Lanka 33 43 36 40 48 43 38.7 17 Cambodia 33 37 34 30 36 32 33.5 18 Regional average 49 57 51 55 59 57 53.7 Scores out of 100, with 100 highest Source: BMI © Business Monitor International Ltd Page 12 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 Vietnam maintains its... in paediatric wards due to the introduction of a policy to provide free healthcare to children under six In one regional hospital, the number of young children receiving treatment increased by over © Business Monitor International Ltd Page 31 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 30% in 2005 Local authorities claim healthcare expenditure is not sustainable at these levels and many parents . deadline: March 2012 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 © Business Monitor International Ltd Page 2 Vietnam Pharmaceuticals & Healthcare Report Q2 2012 ©. environmental damage. Vietnam Pharmaceuticals & Healthcare Report Q2 2012 © Business Monitor International Ltd Page 10 Vietnam Economic SWOT Strengths  Vietnam has been one of. the economy. Vietnam Pharmaceuticals & Healthcare Report Q2 2012 © Business Monitor International Ltd Page 11 Vietnam Business Environment SWOT Strengths  Vietnam has a large,